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Outline I.Public and private debt in local currency up to II.The impact of the Asian crisis in the Debt market. III.Policies to support the Debt market. IV.Current issues and challenges.

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I. Public and private debt in local currency up to 1997 Facts: 1980s: Central Bank issues public debt to finance costs of banking crisis of : Flat-coupon, various maturities up to 20 years, indexed. Maturity of bonds issued varies over time (4,6,8,12,14,20 yr). Key determinants of viability of long-term market: Credibility in UF (institutions). Demand by institutional investors, Pension Funds (PF) and Life Insurance Companies (LIC).

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II. The impact of the Asian crisis in the Debt market Consequences on incentives to market participants: Companies with previous acces to international markets, turn to local market. Development of local expertise in fixed-income securities: Lower cost to new companies to issue debt. Fall in yields imply institutional investors more active in search for return. –Role of Investment Banks

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II. The impact of the Asian crisis in the Debt market Impact on Market: Placements of debt in local market increase in , and further from 2001 onwards. Second increase due to new companies.

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II. The impact of the Asian crisis in the Debt market Impact on Market: Placements of debt in local market increase in , and further from 2001 onwards. Second increase due to new companies. Market segmented in two tranches: 5-year for PF, 20- year for LIC.

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II. The impact of the Asian crisis in the Debt market Impact on Market: Placements of debt in local market increase in , and further from 2001 onwards. Second increase due to new companies. Market segmented in two tranches: 5-year for PF, 20- year for LIC. However: New companies with profile too similar to those of before: Regulated services sectors, and/or large companies.

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II. The impact of the Asian crisis in the Debt market Impact on Market: Placements of debt in local market increase in , and further from 2001 onwards. Second increase due to new companies. Market segmented in two tranches: 5-year for PF, 20- year for LIC. However: New companies with profile too similar to those of before: Regulated services sectors, and/or large companies. Liquidity falls at the end of 90s: –Mergers in PF and Banks –Rise in interest rates in 1998